Selecting aWorkplace Pension

The key requirements for a workplace pension are:

Default investment option so that the member does not have to make a decision, charging no more than a 0.75% per year of the fund value

Minimum contributions as prescribed

Employers will need to set up a workplace pension for auto enrolment. Joining Cheviot is a very simple process and we will do everything we can to help employers deal with auto enrolment with the minimum of fuss or distraction to their business. Once you have chosen your workplace pension provider you will need to register your choice online with the Pensions Regulator.

Some existing pension arrangements, such as the Cheviot pension, may be suitable for auto enrolment. At Cheviot we have ensured the Cheviot Pension meets all the requirements for auto enrolment. Employers will need to check whether any existing schemes meet the requirements and how much support the scheme will provide to help the employer meet its new auto enrolment obligations.

Tax relief

If some of your employees do not pay tax (earning less than £11,500 in 2017/2018 tax year), the Cheviot pension may not be an appropriate scheme for them as they will not benefit from tax relief on their contributions.

Cheviot operate a net pay arrangement. You deduct contributions from your employee’s salary before the tax is calculated. Employees then only pay tax on their remaining salary. If they don’t pay tax, they do not benefit from any tax relief.

An alternative method is the relief at source arrangement. You deduct the net contribution (based on basic rate tax relief) from your employee’s salary. Your employee pays tax, if appropriate, on all of their salary including this pension contribution. The pension provider claims the basic rate tax relief back from HM Revenue and Customs for all employees and they add this to the pension. The member therefore benefits from tax relief whether or not they pay tax. Higher rate tax payers claim the higher rate relief via their tax return

Pension providers will usually only offer one type of arrangement.

How to choose a workplace pension

The Pensions Regulator’s DC code sets out the standards they expect pension providers to meet. It covers six key areas. You should ask them whether they meet the government’s governance standards and charge controls when selecting a workplace pension. (Find out more on the Regulator’s website ‘DC governance standards and charge controls’)

The six key areas are

The Trustee Board

Scheme management skills

Administration

Investment governance

Value for members

Communicating and reporting

In accordance with the DC code, we have produced a Chair’s statement which confirms how we meet the governance requirements.

We have also obtained independent master trust assurance to demonstrate that we have standards of governance and administration that meet the DC code and DC regulatory guidance.

The master trust assurance framework was developed by the Institute of Chartered Accountants in England and Wales in partnership with the Pensions Regulator. It has been designed to help trustees assess whether their scheme meets equivalent standards of governance and administration to those set out in the DC code. In turn, it provides evidence to employers who are looking for a pension provider.